Question 1

_____ occurs when tax-free income allowances grow at a slower rate than earnings.

Accepted Answer

A)  Fiscal drag 
B)  Revenue equivalence 
C)  De?ation 
D)  In?ation illusion 
A)  Fiscal drag 
B)  Revenue equivalence 
C)  De?ation 
D)  In?ation illusion

Question 2

Suppose that households, businesses and organized labour all expect the inﬂation rate to increase and behave accordingly, this will cause:

Accepted Answer

A)  an acceleration of the inﬂation rate. 
B)  a reduction in the inﬂation rate. 
C)  the Phillips curve to shift away towards the origin. 
D)  the level of unemployment to increase. 
A)  an acceleration of the inﬂation rate. 
B)  a reduction in the inﬂation rate. 
C)  the Phillips curve to shift away towards the origin. 
D)  the level of unemployment to increase.

Question 3

If the actual rate of inﬂation is higher than the expected rate of inﬂation, there is a redistribution of wealth from creditors to debtors.

Accepted Answer

A) True 
 B)False

Question 4

In the long run, growth in GDP can only occur with an increase in aggregate supply.

Accepted Answer

A) True 
 B)False

Question 5

If a few industries contribute to a signiﬁcant percentage of a country's GDP, the country is at a relatively higher risk of structural unemployment.

Accepted Answer

A) True 
 B)False

Question 6

If the inﬂation rate was 5 per cent in 2010 and the price index was 120 in 2009, what was the value of the price index in 2010?

Accepted Answer

A)  124 
B)  125 
C)  126 
D)  127 
A)  124 
B)  125 
C)  126 
D)  127

Question 7

When a country is running a balance of payments surplus, it means that the ﬁnancial ﬂows going out of the country are lower than the ﬁnancial ﬂows coming in to the country.

Accepted Answer

A) True 
 B)False

Question 8

If an economy has a volatile in?ation rate:

Accepted Answer

A)  uncertainty will increase making investment decisions di?cult. 
B)  net exports will rise since goods will be imported from other countries. 
C)  the business cycle will be relatively stable. 
D)  the government will pursue policies to shift aggregate supply to the left. 
A)  uncertainty will increase making investment decisions di?cult. 
B)  net exports will rise since goods will be imported from other countries. 
C)  the business cycle will be relatively stable. 
D)  the government will pursue policies to shift aggregate supply to the left.

Question 9

A retailer sells a good to a consumer for £500. The cost of all the inputs used to produce the good is equal to £210. The value added of the retailer will be equal to _____.

Accepted Answer

A)  £210 
B)  £500 
C)  £290 
D)  £790 
A)  £210 
B)  £500 
C)  £290 
D)  £790

Question 10

The inﬂation rate is measured as _____.

Accepted Answer

A)  (price index in current year - price index in previous year)/price index in previous year 
B)  price index in current year/price index in previous year 
C)  price index in previous year/price index in current year 
D)  price index in previous year/(price index in current year - price index in previous year) 
A)  (price index in current year - price index in previous year)/price index in previous year 
B)  price index in current year/price index in previous year 
C)  price index in previous year/price index in current year 
D)  price index in previous year/(price index in current year - price index in previous year)

Question 11

Menu costs are the costs of changing shelf labels and price lists when prices rise quickly.

Accepted Answer

A) True 
 B)False

Question 12

Demand pull in?ation can be caused by:

Accepted Answer

A)  the widespread usage of new cost-saving production technology. 
B)  an increase in the level of capital used in production. 
C)  a large number of ?rms exiting the market. 
D)  an increase in consumption by households. 
A)  the widespread usage of new cost-saving production technology. 
B)  an increase in the level of capital used in production. 
C)  a large number of ?rms exiting the market. 
D)  an increase in consumption by households.

Question 13

Which of the following is an example of a cost incurred in generating higher levels of GDP per capita?

Accepted Answer

A)  A high level of investment in infrastructure. 
B)  An increase in worker productivity from improved health and education services. 
C)  A high number of hours worked per week. 
D)  An increase in innovation that aids the development of new products. 
A)  A high level of investment in infrastructure. 
B)  An increase in worker productivity from improved health and education services. 
C)  A high number of hours worked per week. 
D)  An increase in innovation that aids the development of new products.

Question 14

If the nominal rate of interest is 6 per cent and the real rate of interest is 10 per cent, the rate of inﬂation is _____.

Accepted Answer

A)  4% 
B)  -4% 
C)  3% 
D)  -3% 
A)  4% 
B)  -4% 
C)  3% 
D)  -3%

Question 15

The output method of measuring GDP is equivalent to the incomes method of measuring GDP.

Accepted Answer

A) True 
 B)False

Question 16

A policy implication of the downward-sloping Phillips curve is that:

Accepted Answer

A)  monetary policy is more appropriate than ﬁscal policy in controlling inﬂation. 
B)  it is not possible for the economy to achieve full employment. 
C)  policy makers may face a trade-off between inﬂation and unemployment. 
D)  it is possible to control inﬂation and maintain a high level of employment. 
A)  monetary policy is more appropriate than ﬁscal policy in controlling inﬂation. 
B)  it is not possible for the economy to achieve full employment. 
C)  policy makers may face a trade-off between inﬂation and unemployment. 
D)  it is possible to control inﬂation and maintain a high level of employment.

Question 17

The unemployment that resulted when the typewriter industry went into decline is called _____.

Accepted Answer

A)  classical unemployment 
B)  structural unemployment 
C)  frictional unemployment 
D)  cyclical unemployment 
A)  classical unemployment 
B)  structural unemployment 
C)  frictional unemployment 
D)  cyclical unemployment

Question 18

How do governments manage the economy by controlling aggregate demand and aggregate supply? What are the policy tools used by the central bank of a country?

Accepted Answer

Government can use ?scal policies (such

Question 19

In the following graph, S and D represent the supply and demand curves, respectively, in the labour market. Refer to the graph to answer the question.   The labour market is in equilibrium when _____ workers are employed.

Accepted Answer

A)  200 
B)  100 
C)  300 
D)  275 
A)  200 
B)  100 
C)  300 
D)  275

Question 20

Which of the following statements is correct?

Accepted Answer

A)  Factories and ?rms reduced in size during recession. 
B)  Unemployment rate decreases during a recession. 
C)  In?ation causes real interest rates to decrease. 
D)  In?ation is always costless. 
A)  Factories and ?rms reduced in size during recession. 
B)  Unemployment rate decreases during a recession. 
C)  In?ation causes real interest rates to decrease. 
D)  In?ation is always costless.

_____ occurs when tax-free income allowances grow at a slower rate than earnings.

Suppose that households, businesses and organized labour all expect the inﬂation rate to increase and behave accordingly, this will cause:

If the actual rate of inﬂation is higher than the expected rate of inﬂation, there is a redistribution of wealth from creditors to debtors.

In the long run, growth in GDP can only occur with an increase in aggregate supply.

If a few industries contribute to a signiﬁcant percentage of a country's GDP, the country is at a relatively higher risk of structural unemployment.

If the inﬂation rate was 5 per cent in 2010 and the price index was 120 in 2009, what was the value of the price index in 2010?

When a country is running a balance of payments surplus, it means that the ﬁnancial ﬂows going out of the country are lower than the ﬁnancial ﬂows coming in to the country.

If an economy has a volatile in?ation rate:

A retailer sells a good to a consumer for £500. The cost of all the inputs used to produce the good is equal to £210. The value added of the retailer will be equal to _____.

The inﬂation rate is measured as _____.

Menu costs are the costs of changing shelf labels and price lists when prices rise quickly.

Demand pull in?ation can be caused by:

Which of the following is an example of a cost incurred in generating higher levels of GDP per capita?

If the nominal rate of interest is 6 per cent and the real rate of interest is 10 per cent, the rate of inﬂation is _____.

The output method of measuring GDP is equivalent to the incomes method of measuring GDP.

A policy implication of the downward-sloping Phillips curve is that:

The unemployment that resulted when the typewriter industry went into decline is called _____.

How do governments manage the economy by controlling aggregate demand and aggregate supply? What are the policy tools used by the central bank of a country?

In the following graph, S and D represent the supply and demand curves, respectively, in the labour market. Refer to the graph to answer the question. The labour market is in equilibrium when _____ workers are employed.

Which of the following statements is correct?

Economics for Business

Consumers in the Marketplace

Firms in the Marketplace

Markets in Action

Market Structure and Firm Performance

Strategic Rivalry

Growth Strategies

Governing Business

Introduction to the Macroeconomy

Expenditure and Fiscal Policy

Money, Banking and Interest

Inflation, Output and Economic Policy

Supply-Side Policies and Economic Growth

Exchange Rates and the Balance of Payments

Globalization

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Exam 10: Measuring Macroeconomic Variables and Policy Issues

_____ occurs when tax-free income allowances grow at a slower rate than earnings.

Suppose that households, businesses and organized labour all expect the inﬂation rate to increase and behave accordingly, this will cause:

If the actual rate of inﬂation is higher than the expected rate of inﬂation, there is a redistribution of wealth from creditors to debtors.

In the long run, growth in GDP can only occur with an increase in aggregate supply.

If a few industries contribute to a signiﬁcant percentage of a country's GDP, the country is at a relatively higher risk of structural unemployment.

If the inﬂation rate was 5 per cent in 2010 and the price index was 120 in 2009, what was the value of the price index in 2010?

When a country is running a balance of payments surplus, it means that the ﬁnancial ﬂows going out of the country are lower than the ﬁnancial ﬂows coming in to the country.

If an economy has a volatile in?ation rate:

A retailer sells a good to a consumer for £500. The cost of all the inputs used to produce the good is equal to £210. The value added of the retailer will be equal to _____.

The inﬂation rate is measured as _____.

Menu costs are the costs of changing shelf labels and price lists when prices rise quickly.

Demand pull in?ation can be caused by:

Which of the following is an example of a cost incurred in generating higher levels of GDP per capita?

If the nominal rate of interest is 6 per cent and the real rate of interest is 10 per cent, the rate of inﬂation is _____.

The output method of measuring GDP is equivalent to the incomes method of measuring GDP.

A policy implication of the downward-sloping Phillips curve is that:

The unemployment that resulted when the typewriter industry went into decline is called _____.

How do governments manage the economy by controlling aggregate demand and aggregate supply? What are the policy tools used by the central bank of a country?

In the following graph, S and D represent the supply and demand curves, respectively, in the labour market. Refer to the graph to answer the question. The labour market is in equilibrium when _____ workers are employed.

Which of the following statements is correct?

Economics for Business

Consumers in the Marketplace

Firms in the Marketplace

Markets in Action

Market Structure and Firm Performance

Strategic Rivalry

Growth Strategies

Governing Business

Introduction to the Macroeconomy

Expenditure and Fiscal Policy

Money, Banking and Interest

Inflation, Output and Economic Policy

Supply-Side Policies and Economic Growth

Exchange Rates and the Balance of Payments

Globalization

Filters